SUPPLY, DEMAND & the F.D.A.
Supply and demand is one factor that determines the cost of goods. As more people are choosing natural adjuncts or alternatives to pharmaceuticals, the demand for supplements and botanicals is on the rise. Tighter regulations make it more difficult for less scrupulous manufacturers to cut corners thereby decreasing the available supply of high quality raw materials. Even those companies that have been producing superior products all along can experience difficulty in acquiring raw materials that meet their high standards. It is not uncommon for our vendors to choose to keep items on long-term out-of-stock status rather than accept sub-par materials.Changes in FDA regulations have also impacted pricing. For example, testing every individual ingredient (for which there is a validated testing method) on a multivitamin with dozens of components can have a huge impact on the price of the final product, especially for a small company with fewer products to share the cost.
LOCAL & GLOBAL WEATHER CONDITIONS
Farmers and wildcrafters have always been at the mercy of local climate conditions that can vary from boom to bust from year to year. The supply chain can be further disrupted by climate change or global weather extremes like those particularly evident in the last two years. Rising air temperatures may negatively affect photosynthesis activity and a plant's ability to stay hydrated, as well as being detrimental to the birds, bees and other animals that pollinate 30% of crops and 90% of wild plants. (SeeNatural Resources Defense Council .)Changes in the frequency and severity of droughts and floods have had devastating impacts on crops, wild plants and even ecosystems. In 2015, for example, poor harvests led to higher prices ofBILBERRY and in 2016 ofGINKGO (up 9%), garlic (up 12%),PSYLLIUM (up 15%) andSAW PALMETTO (up 50% - 55%), just to name a few. Although these factors impact the entire natural product industry influencing prices across the board, Vitamer (maker of EVERGREEN s brand) absorbed a great deal of the cost increases of raw materials in 2016. They will continue to absorbsome of these increases in 2017, passing on only about 2.5% overall.
In addition, rising water temperatures and ocean acidification may affect marine-sourced ingredients such as seaweeds, krill and small fish as our oceans ecologies are disrupted.NORDIC NATURALS , makers of sustainable fish oil products, has stated that they will absorb many of the cost increases associated with our raw materials and manufacturing processes,
[but] must make a reasonable price increase to a select group of products.
OTHER INFLUENCES
Non-botanical ingredients are also affected. For example, raw materials to producePANTOTHENIC ACID (Vitamin B5) increased 312% in 2016 after a major supplier discontinued production.PYRIDOXINE HCL (Vitamin B6) went up 32% in 2016 due to manufacturer changes. Raw materials for thiamine (Vitamin B1) went up 41% in 2016 andFOLIC ACID increased 37% in 2015 and continued to rise in 2016. After several manufacturers ofMELATONIN closed their facilities, raw materials went up 73%. Raw materials forZINC GLUCONATE increased 13% last year but now the cost must be passed on.Please note that only a small portion of these increases will be reflected in the prices of our Evergreen brand. Vitamer/Evergreen absorbed the lions share of these increases last year, but in 2017 an average of 2.5% of these increases will be passed along. And althoughL-LYSINE costs increased 38%, our in-house brand prices will remain the same.
Not all price increases are due to the weather or increased material costs. In August a fire caused severe damage to National Enzyme Companys facility in Forsythe, Missouri. NEC is a contract manufacturer of vitamins, minerals, probiotics, enzymes and botanical supplements. For the Evergreen brand, this led to a 26% increase inPROBIOTICS, but the drop in production of such a wide range of supplements will surely be felt on a national level. Fortunately, all employees of NEC were safely evacuated in less than 40 seconds and the company will be fully operational soon.